The Supreme Court saves the bank from paying up to 29.3 billion for mortgages

The banks will save 640 million annually in the new mortgages and an invoice of up to 29,300 million if total retroactivity had been applied.
The Supreme Court has saved the bank from paying up to 29,300 million for the tax of Documented Legal Acts (AJD) on mortgages, a rate that customers paid until last October 18 the High Court modified its previous case law, determining that it was the entities that paid the amount. After two weeks of strings and lows in the bosom of the Supreme, the bank wins. You will not have to pay the aforementioned tax as of now and, obviously, you will not suffer the impact of the retroactivity of the regulations, as defended by some jurists.

If the Supreme Court had ruled against the banks and retroactivity had been complete, all clients with a mortgage would have been able to claim a refund of this fee. In this scenario, Gestha calculated that the total bill for the financial sector would have amounted to 29,288 million euros. The union of technicians of Finance (Gestha) considered that 15 million taxpayers would have benefited from the returns.

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Beyond theoretical exercises as to what the invoice of retroactivity would have supposed, what is a fact is that the banks will save themselves by not having to face this tax, as it was largely discounted of the market, around 640 million euros per year, according to Moody’s calculations. The rating firm calculated that financial institutions should have assumed this extra cost, with a “limited” impact on profitability.

In this way, justice has given reason to financial institutions that, in recent days, have defended the stability of the legal framework. Banks and employers warned that the mortgage market in Spain works well and any modification could be a risk. In addition, they pointed to a possible increase in mortgage loans to transfer to customers the cost increase they should assume.

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Since October 18 the Supreme Court threw a jug of cold water to the financial sector by changing the case law on the payment of the AJD, Spanish banks have lost more than 5,400 million euros. The most penalized has been Unicaja with a collapse of 14%, followed by Bankia, with a fall of 9%. After these, Sabadell and Bankinter lost around 6.5%. The CaixaBank (-4.6%), Liberbank (-2.7%) and the big banks, BBVA and Santander, have suffered better, with decreases of 2.6% and 0.44%, respectively.

The stock market analysts have made their calculations during the last days to assess which banks would have been the most penalized if the High Court had ratified the change of criteria. According to Santander, the most affected entities in terms of capital and income would have been Bankia, CaixaBank and Liberbank.

Banks have lost 5,400 million in the stock market since the Supreme Court indicated on October 18 that the AJD should pay them for banking

For its part, Mirabaud explained in a report that Bankinter, Bankia and Sabadell had been the worst hit, while Liberbank and Unicaja had suffered a minor blow.

“We must have two elements in mind: the first, the average size of the mortgage, since for small mortgages, initiating a judicial process or claim, could be a barrier. That is why entities with average mortgages of high amounts (such as Bankinter, Bankia or Sabadell) could have more risk than others such as Unicaja or Liberbank, whose average mortgages barely exceed 60,000 euros, “explained the Swiss bank.

Bankia would have been one of the most punished entities if the Supreme Court had ratified the change of criteria

Citi considered that Spanish banks that would have been most penalized in terms of capital and book value were Bankia (2% -6%), Liberbank (2% -5%), Unicaja (2% -5%), Bankinter ( 1% -4%), CaixaBank (1% -4%) and Sabadell (1% -3%). BBVA and Santander, in their opinion, would be the least affected (0-2%), given that their exposure to the Spanish market is lower.

Statement of the bank
During the last days, employers and senior managers of the bank have spoken out against taking over the AJD tax. José Antonio Álvarez, CEO of Santander, said that the change of criteria by

The Court of the Supreme Court posed a risk to the mortgage market and demanded legal security. For his part, Jose Sevilla, CEO of Bankia, recalled that “banks and customers for 23 years we have done what the law mandated. If you decide to change this practice, it would be normal for you to change forward and not backward. There should be no penalty for having complied with the law. ” The rest of the first swords of the financial sector poured similar opinions during the presentations of results of the third quarter that have occurred in the last two weeks. Employers representing the financial sector had claimed legal security and underlined that, in the event that the tax of AJD would have had to be returned, the responsibility fell on the Public Administration. “The credit institutions have not received any amount of their clients for this concept […] The banks have always complied with the current regulations approved more than 20 years ago and with the settled case-law of the 3rd Chamber of the Supreme Court and the Constitutional Court , unanimous, and maintained until very recent dates, principle that otherwise has always presided over the relations of the entities with their clients, “they said in a joint statement by AEB, CECA and Unacc.